UPDATE: Housing Rates Set, Rate Protection in Place
By Jim Garamone
American Forces Press Service
WASHINGTON, Dec. 27, 1999 The recently released Basic Allowance for Housing rates effective Jan. 1 were computed using a new method of measuring housing costs for service members in the United States.
DoD officials said this more accurately reflects the actual cost of housing. DoD computes BAH for more than 400 locations in the United States. DoD-wide about 752,000 service members are eligible for BAH. About 73 percent receive BAH at the "with dependent" rates.
The Defense Finance and Accounting Service will post the rates. The site is at http://www.dtic.mil/perdiem/bahform.html. While the rates are different for each area, overall, the new BAH rates mean junior enlisted will receive more money. Further, rates in high cost areas will go up for all ranks.
"The major change in BAH was to find a way to more accurately reflect housing costs for service members in the areas they are assigned," said Vice Adm. Pat Tracey, deputy assistant secretary of defense for military personnel policy. "We found that under the old [Basic Allowance for Quarters/Variable Housing Allowance] system that people would move into housing that was less costly and, because we surveyed them on where they were living, we kept driving down the rates in some areas, and people found it more and more difficult to find affordable housing.
"We ended up setting rates that drove people into less acceptable housing in more and more risky neighborhoods."
Under the new system officials compute the BAH rates based on surveys of what it costs to live in particular communities rather than service members' reports of what they paid. The old system worked to the disadvantage of junior enlisted members and to all service members living in high-cost areas, officials said.
Service members in lower cost areas may see the published rates for their area go down, but will not see this mirrored on their leave and earnings statements. "In areas where the rates go up, service members will receive the new rates," said Navy Capt. Elliott Bloxom, DoD's director of compensation. "But in areas where the rates go down, individuals will be protected. They will not see their allowance drop. But new people moving in will receive the lower rates."
This rate protection applies throughout the country. Service members will not be penalized in 2000 if the rate drops. "They may have negotiated their lease payments at the higher rate," Bloxom said. "As long as members stay in their current locations they will not see their rate drop."
When they move to their next assignments, they will be paid the published rates at the time for their new locations.
Rate-protected service members sponsoring a family should be aware of the new rates, however. "If they are sponsoring someone who is moving to the area, those new people will not receive the same rate they do," Bloxom said.
The changes this year essentially complete the transition from the old system of BAQ/VHA to BAH four years early.
DoD officials have resolved the potential problem caused by differences in the fiscal 2000 defense authorization and appropriation acts. The authorization act pledged $225 million more to the BAH program, but the appropriations act -- the act that actually appropriates money -- set the amount at $100 million.
DoD officials said the military services cut other programs to come up with the additional $125 million.
BAH does not cover all of service members' housing costs. By law, service members should pay no more than 15 percent of the national median housing costs out-of-pocket. In 1999, the percentage was 19.8 percent. Making this transition will allow DoD to reduce the typical service member's out-of-pocket costs. Officials estimate the out-of-pockets costs will be at 18.8 percent in 2000 and 15.8 percent by 2003.
Tracey and Bloxom said the 2000 rates would be a pleasant surprise for service members. "BAH allows us to increase rates in the higher cost areas while allowing us to provide rate protection," Bloxom said. "Nobody will lose. People in areas where the rates go up will receive them, people in areas where they go down will be protected."